Acquiring new customers helps any small business grow. Customers are known to come and go. All customers that leave are not necessarily dissatisfied or disgruntled. Customers may move out of your area for any number of reasons, or no longer need your products or services. Worst case scenario would be that for some reason, you failed to build customer loyalty.
To grow a small business, former customers have to be replaced. Remember that current customers are the lifeblood of your business and keeping them satisfied should be your highest priority. Their experience with your firm, your products or services and your staff needs to be exceptional. For all of these reasons, it is imperative that you build customer loyalty.
Statistics show that, on average, U.S. companies lose half of their customers every five years. It’s pretty common knowledge that it costs 4-6% more to acquire a new customer than it does to retain an existing customer. Statistics on acquiring new customers vs. impressing and keeping existing customers was shared on this Infographic by Invespcro.
Why Build Customer Loyalty?
Why should you be concerned about the need to build customer loyalty? I have no idea why any small business owner would not want loyal customers. Creating loyal customers should rank high on your list of priorities. Here are a number of reasons you should be concerned:
- Existing Customers are more likely to make additional purchases. An existing customer is 60-70% more likely to buy from you again. The probability of a new customer making a purchase is only 5%-20%.
- Satisfying existing customers will make them easier to sell to again. They know your firm, your staff, your service, your products already. There is no need for them to search for a new source if you did your best the first time around.
- Existing customers are 50% more likely to try a new product or service you offer than new customers.
- Existing customers spend 31% more than new customers do.
- If you retain only 5% more customers, your profits can increase by 25-95%.
7 Ways to Keep Customers Coming Back.
The primary reason to build customer loyalty is to develop relationships with customers who can become brand ambassadors for your company and its products. Nothing goes further to attract new customers than having someone speak on your behalf.
Loyal customers become someone who can speak highly of your firm, or product. They become ambassadors who they have dealt with you, loved your products, or loved the service you provided. Each satisfied customer will tell a half dozen or more others about their experiences.
- Understand lost customers. Many business owners mistakenly believe that customers choose to patronize other companies solely because of better prices. While pricing can be a concern, customers often head to the competition when they don’t feel valued. Don’t ignore them.
- A change of lifestyle may have created a situation where customers no longer need your product. By staying in touch with their needs, you might be able to adjust your offerings to continue servicing them.
- Know your customer’s top priority. It could be reliability or speed or cost. Your company should know your clientele’s No. 1 priority and consistently deliver it. Remember, customers’ desires change frequently, so address this question every six months.
- Acknowledge the lifetime value of customers. The lifetime value of your customers is the income you would gain if a customer stayed with you as long as they could possibly buy your product or service. For example, the lifetime value of a customer might span several decades or span several generations.
- Create a positive first impression. Good first impressions tend to generate loyal customers, and you get only one chance to make a positive first impression. Appearance is important. The exterior and interior of your business should be neat and clean. Attitude of employees is important, as is their appearance. Your small business should have a dress code that supports the culture of your brand.
- Listen to the customer. Employees should listen actively to customers. Reassure your customers that you genuinely want to help them. Customers will judge your business based on the politeness, empathy, effort and honesty of your staff. Seek feedback following each purchase, delivery or installation. Send brief surveys, either in print or online. Set up a focus group of valued customers and ask for their input in person.
- Address and resolve complaints quickly and effectively. Inevitably, employees will encounter dissatisfied customers. Whether they’re returning an item or changing a service, customers expect a fair policy. If you cannot offer a resolution immediately, let the customer know when he or she can expect an answer.
Build customer loyalty by developing relationships with customers who can become ambassadors for your company. Nothing attracts new customers like other happy customers. Remember, each satisfied customer will tell 5-6 others about your firm. Those ‘others’ may not be who you would otherwise reach through your own marketing effort. Review each touch-point you have with customers to ensure that each one will build customer loyalty.